When Mark Pincus hired a new executive to run Zynga, the online games company he founded, he tweeted a message calling the executive, Don Mattrick, an “Internet treasure.”

Now, less than two years later, Zynga’s Internet treasure has left the company, and Mr. Pincus has returned as chief executive.

The departure of Mr. Mattrick as chief executive was not altogether surprising to many in the industry, since a long-running turnaround plan that he set in motion at Zynga had yet to take flight. The return of Mr. Pincus to the top job, though, was unexpected since he had seemed to have largely disengaged from the business of running Zynga, best known for early Facebook games like Zynga Poker and FarmVille.

The abrupt change in leadership was another setback for a company that was once poised to be a leader in a new era of games and the Internet. Other Internet darlings of the same era, such as Groupon, have also faded after their growth fizzled and profits proved elusive

The changes were effective immediately, the company said. In a statement, Mr. Mattrick said he would return to Canada, where is he from.

“I believe the timing is now right for me to leave as C.E.O. and let Mark lead the company into its next chapter, given his passion for the founding vision and his ability to couple our mobile progress with Zynga’s unique strengths,” Mr. Mattrick said.

In an interview, Mr. Pincus said that the company did not fire Mr. Mattrick, but that the two agreed it was time for Mr. Pincus to return to the chief executive job.

“Don and I share a deep commitment to this company achieving its potential,” Mr. Pincus said, and added that he would continue to receive guidance and coaching from Mr. Mattrick.

Founded in 2007, Zynga, based in San Francisco, was among the first companies to bring free-to-play games to a mass audience in the United States. That approach to the business, pioneered by companies in Asia, opened games up to huge new online audiences, a small portion of whom spent money on virtual currency and other goods that enhanced their game experiences.

For a time, Zynga’s growth sent tremors throughout the games business, as it siphoned talent from established companies like Electronic Arts.

Quickly though, Zynga found itself disrupted by technology changes. It initially found success by publishing its games on Facebook, as the social network was taking off. But with the advent of the iPhone in 2007 and other smartphones, momentum in the business quickly shifted to mobile games.

While Facebook, too, struggled at first with the rise of mobile, it eventually adapted to the changes and now has thriving business from smartphones. Zynga has not made the leap as effectively.

Word of Mr. Pincus’s return was puzzling to some and suggested that the transition was sudden. Mr. Pincus has not been a visible presence in Zynga’s offices over the past year, though he occasionally emailed staff with his thoughts about Zynga games, according to one Zynga employee, who asked for anonymity because the company’s internal communications are confidential.

While he had left daily operations, Mr. Pincus still wielded tremendous influence over the company through a share structure that gave him 63 percent of the voting power of its outstanding capital stock, as of the end of last year.

Mr. Mattrick, a longtime Electronic Arts executive who later ran Microsoft’s Xbox business, reoriented the company toward mobile and reduced its reliance on Facebook. Still, 51 percent of the company’s revenue last year came from Facebook games, according to company filings.

Games are a hit-driven business, and Zynga titles in recent years were never able to capture the cachet of games from mobile-centered companies, like Candy Crush Saga from King.com and Clash of Clans by Supercell.

The company’s finances continued to worsen under Mr. Mattrick. Revenue last year was $690 million, down from $1.28 billion in 2012, the year before Mr. Mattrick took over. The company’s net loss rose to $226 million last year from $209 million in 2012.

As growth slowed at Zynga, and the tech job market around it in San Francisco boomed, the company has struggled to hold onto talent. At the end of last year, about 42 percent of the company had been with Zynga for less than a year and 55 percent for less than two years. “We have experienced significant turnover in our head count over the last year, which has placed and will continue to place significant demands on our management and our operational, financial and technological infrastructure,” the company said in a filing.

Last year, the company botched the introduction of a new Zynga Poker game for mobile. Use and revenue declined from the previous game, which Zynga was then forced to bring back.

Investors have lost interest in the company. Its stock is almost unchanged since the day before Mr. Mattrick joined.

In February, Richard Greenfield, a media and Internet analyst at BTIG Research, published a report highly critical of Mr. Mattrick’s leadership, titled “Zynga Needs a New Leader — Time for Don Mattrick to Go.”

With Mr. Pincus’s return, the company is likely to reinstate his data-driven approach to creating games, focusing on metrics about how and why people are playing Zynga’s games, and using that information to tweak production.

That is in sharp contrast to the approach of Mr. Mattrick, who has typically been less focused on analytics and has championed game quality over all.

“We need to get back to being the leader in mobile data and analytics, which leads to the best product management in our games,” Mr. Pincus said. “I think I bring a DNA and passion, in that respect.”

Many moons ago, in the early 80s, I was involved with a custom software company that wrote code for anything from a Wang to a IBM PC and many other systems in between. We were all young and full of beans, as the saying goes, so we hired a guy (literally) from IBM to come in and "take us to the next level".

HUGE mistake. Basically, this guy was worthless to a young startup company. He cost us salary, time and other intangibles that became an albatross around the neck of this vibrant young entity. In essence, trying to "do the right thing" by bringing in what we thought was "high end talent", this guy did nothing to aid in our advancement. He actually helped drive the company into the ground.

I was fortunate to be the main programmer, so I was able to walk away with all my clients after the company folded. I did very well as a consultant going forward but we were on the ground floor of the IBM/MSFT pc revolution and we were writing code for small business systems. That area absolutely exploded over the next few years. I was fortunate to reap a great benefit but it's always an afterthought about what could have been had this clown been more in tuned to what this small, flourishing company needed to help it grow!!!

I had a similar experience in the mid 80s. I was the CFO of a network oriented (Novell) microcomputer distributor with a product line that was continually being turned over because of technological advances. The environment was one a barely controlled chaos and the company needed a leader capable of turning on a dime. The CEO, who was a part time presence, recruited a friend for the position of President who had had a high level position with a semi-conductor distributor. A completely different world. The President never adapted to the pace and took so long to make decisions that it seriously hurt the company. His biggest mistake was trying to take a sales staff that was barely civilized and turn them into the button-down drones that he was used to managing. The owner eventually terminated both the President and the CEO.

Those categories are Action-Strategy (such as Empires and Allies, a new game launched yesterday), Social Casino (Hit It Rich), Invest & Express (FarmVille), Casual (Words With Friends) and Racing (CSR Racing).

The layoffs will finish within the next three quarters, according to a company press release, and are expected to save $45 million every year. Zynga expects to cut $55 million in other costs by the third quarter of 2016, but will take on restructuring charges of between $18 million and $22 million in the current quarter.

Zynga also came in ahead of Wall Street’s earnings expectations in the fiscal quarter that ended in March, reporting a net loss of $6.7 million, or one cent per share, on $167 million in sales. The Street was expecting a loss of two cents per share on sales of $148 million.

In an interview with Re/code, Pincus said the layoffs are aimed at “de-layering and de-cluttering the organization” and have come from corporate and central services, rather than game development. However, the company will exit the sports genre it entered last year and close the Orlando studio that developed the fantasy football-esque game NFL Showdown.

“We identified a couple places where we want to be world-class, like data analytics,” Pincus said. “But in other places — we will let Amazon manage our data centers, for instance.”

Mobile now accounts for 63 percent of Zynga’s revenue, continuing a trend that started last quarter; the company previously said it hoped to get that number to 75 percent in the current fiscal year.

Pincus said some games such as Zynga Poker and FarmVille still have “significant” daily active users on the Web, but that moving forward, the strategy for all games is “mobile first or mobile-also.” He pointed to the success of the Hit It Rich slots games amid several other casino game options as a model for attracting players to new releases.

In 2009, ZyngaZNGA +0.71% was a marquee customer for Amazon.com 's AMZN +1.41% cloud-computing services. Two years later, it spent $100 million to build its own data centers to handle the bulk of its computing. Now Zynga’s cloud cruise has come full circle.

“There’s a lot of places that are not strategic for us to have scale and we think not appropriate, like running our own data centers,” Zynga CEO Mark Pincus told investors on a conference call. “We’re going to let Amazon do that.”

Why the change? Well, Zynga’s business changed. The company grew fast as a maker of popular Web-based FacebookFB +0.22% apps, but stumbled as the world moved to mobile games.

“Their business didn’t grow the way they expected,” said Lydia Leong, an analyst with industry research firm Gartner. “Games were unpredictable,” she said, making it hard to plan computing needs.

Meanwhile, Amazon changed too. The company has famously slashed its cloud computing prices, and today offers companies like Zynga more flexibility to tap the right amount of computing power and storage, Leong said.

Even after Zynga built its data centers in 2011, it still relied on Amazon for some tasks. That required the company to create software for the data centers, called zCloud, which made it easier to switch between Amazon’s servers and its own. The zCloud was based on open-source software called CloudStack, Leong said.

Zynga declined to comment for this article.

Amazon rivals MicrosoftMSFT +2.36% and IBM sa IBM +1.13%y they offer customers an easier way to create such “hybrid” clouds, mixing customer-owned computers and a cloud provider. But Gartner’s Leong says customers can accomplish the same tasks using Amazon’s cloud without much additional effort.

When Zynga built the data centers, it bet that it could operate them more cheaply than paying Amazon. But squeezing better price performance out of a city block of servers turned out to be a tricky proposition.

Zynga may have simply decided that it wanted to be a gaming company, not a technology company, said David Moser, the chief technology officer of Zenovia Digital Exchange, an advertising-technology vendor that recently shifted much of its computing power from Amazon to its own data centers.

“Running a data center is expensive,” he said. “There are lots of mouths to feed when you have your own data center.”

It looks like Angry Birds maker Rovio is having some troubles to pay the bills. The Finnish company is about to cut 260 jobs after reducing its workforce by 110 employees in October 2014. At the end of 2013, the company had 800 employees in total.

This news comes as a surprise as Rovio’s latest game is a big success. Angry Birds 2 has been downloaded nearly 50 million times in just a month, topping the charts

In the U.S. (at least for a couple of weeks), one of the main App Store markets:

In China where the franchise is very successful:

In many other countries:

But generating millions of downloads is just part of the challenge. Angry Birds 2 is already falling in the charts around the world, and its freemium model doesn’t seem to be working great. In the U.S., Angry Birds 2 managed to reach the 42nd spot in the top grossing category shortly after its launch. While this is no small feat, it is nowhere near Game of War (#1), Clash of Clans (#2), Candy Crush Saga (#4) and Candy Crush Soda Saga (#7) — these games have been trusting the top grossing charts for months.

In other words, Angry Birds 2 is probably not enough to pay hundreds of employees. Rovio has offices in Espoo, Stockholm, London, New York, Los Angeles, Vancouver, Shanghai, Seoul and Tokyo — this isn’t your average indie game development shop.

The Angry Birds franchise has been one of the first breakthrough gaming successes on the App Store and Play Store. Millions of people paid a few dollars to download the latest iteration in the franchise. Yet, it’s a brand new world for mobile gaming. Now it’s all about free-to-play games, micro transactions and waiting times. Angry Birds wasn’t designed for this model.

Rovio also has a strong merchandise business — the company has been licensing its brands to sell a ton of Angry Birds teddy bears, notebooks and pens. But as the game franchise becomes less popular, these items could become irrelevant as well.

There is one last hope for Rovio — The Angry Birds Movie. The company has been working on a movie for a while now, expecting to release it in May 2016. Rovio said that the job cuts will affect the entire organization, except the teams working on the movie in the U.S. and Canada. Focusing the company’s budget and energy on this movie is a big bet, and it will determine the fate of the gaming company.

Zynga has put its San Francisco headquarters up for sale, confirming a report today from the San Francisco blog SFist.

The social mobile game company’s headcount is down around 2,300 or so, significantly down from its peak above 3,500 people. That means it doesn’t need as much space as it once did. Zynga acquired the space, which was once the U.S. headquarters of Sega, for $228 million. Now it maybe worth much more, given the boom in San Francisco real estate.

Zynga confirmed the headquarters is up for sale, noting it said so during its fourth quarter conference call. GamesBeat didn’t actually notice that. It plans to sell the building and then take out a long-term lease. Right now, the move is in the exploratory phase. If the company sells, it plans to lease back so employees can stay in the building.

Founded in 2007, Zynga grew dramatically on the popularity of its Facebook games. It went public at a $9 billion valuation at the end of 2011, but then it faltered. The company had a hard time getting its footing in mobile games, and its audience on Facebook’s desktop platform started to decline.

Mark Pincus, the chief executive and the company’s founder, brought in former Electronic Arts and Microsoft Xbox executive Don Mattrick to help turn things around. Mattrick cleaned house on the management team and acquired NaturalMotion for $527 million, but he found the turnaround task to be a tough one. He left in April 2015, and Pincus returned to the CEO job.

For the past three quarters, Zynga has been paring back and reporting breakeven results. Its market value is around $1.9 billion today, as investors have become patient for the turnaround. But Zynga doesn’t necessarily need any cash, as it has more than $900 million on its balance sheet already.

Mark Pincus has stepped down from his role as CEO of publicly-traded social game developer Zynga, less than a year after taking the reins in April 2015. He's staying with the company in a new role of executive chairman.

Now, Pincus is handing the CEO role over to Zynga board member Frank Gibeau, a 25-year gaming industry veteran credited with completely turning around mega-publisher Electronic Arts' mobile gaming business, the company announced after market close on Tuesday.

Under Gibeau, EA turned mobile games like "The Simpsons: Tapped Out" and "Plants vs. Zombies" into lucrative businesses. Now, the hope is that he'll bring some of that magic to Zynga — because, frankly, the once-hot Zynga needs it.

This was actually Pincus' second run as Zynga CEO: He served as CEO from the company's founding in 2007 through 2013, when he stepped down and handed the role over to Microsoft veteran Don Mattrick. In early 2015, Mattrick himself stepped down, and Pincus stepped back up as CEO.

Still, Pincus tells Business Insider that he's proud of his 11-month tenure as CEO: He says that under his watch, Zynga's teams are collaborating in ways that they hadn't, and the overall culture is far more focused on its most lucrative businesses, including its fast-growing slot machine and poker games.

"I put all of that in motion," Pincus says. "I don't need to win CEO of the year to feel good about that."

Pincus says that Gibeau has been very involved with Zynga's business and plans over the seven months he's held a board seat. Because of that, Pincus doesn't anticipate a lot of bumps during the transition.

"I saw more and more opportunity for [Gibeau] to engage here," Pincus says, culminating in Pincus going to the board and asking for this change, he says.

And while Gibeau handles the day-to-day tasks of the chief executive, Pincus says that he's going to stay involved with Zynga, focusing on bigger-picture vision stuff, what he calls "product entrepreneurship," and helping teams within the company talk to each other.

"I think it's important that founders and CEOs are self aware of where they can add value or not," Pincus says.

A bicyclist rides by Zynga headquarters in San Francisco.(Photo: Justin Sullivan, Getty Images)_____________________________

Zynga topped Wall Street forecasts Wednesday with its first-quarter financial results, the first under new CEO Frank Gibeau.

The San Francisco-based maker of FarmVille and other titles reported sales of $187 million, beating forecasts of $171.85 million, according to analysts polled by S&P Global Market Intelligence. Earnings were break-even, besting projections of a loss of a penny per share.

First-quarter bookings, the money spent on games by consumers, reached $182 million, up 8% from a year ago.

News of the financial results sent Zynga shares surging 11.5% to $2.57 in Thursday trading.

"There are so many things we could focus our attention on and do better that I think will lead us to better results over the long term," Gibeau, who replaced Zynga founder Mark Pincus as CEO in March, said in an interview. (Pincus remains Zynga's chairman.)

Although the company cut costs and recorded a rise in advertising revenue, it projected a $20 million to $26 million loss for its current quarter.

Previously, Pincus stepped down as CEO and brought in Xbox veteran Don Mattrick to jump-start Zynga's push into mobile gaming. Indeed, during the first quarter, 76% of Zynga's overall bookings were generated from mobile, a 31% jump compared to last year.

"We believe that Zynga has an opportunity to create new social experiences to connect even more players together," Gibeau said.

Zynga said its loss would widen in the current quarter, with revenue coming in below expectations. Shares dropped 8.1% in after hours trading.

The San Francisco company, known for its social games Farmville and Words with Friends, has been trying to steady its business. Zynga had a meteoric rise, thanks largely to a marketing relationship with Facebook FB 1.51 % in its early days, but since the company went public in late 2011 the stock has tumbled. Shares made their debut at $11 and most recently closed at less than $3.

The company has been trying to shore up cash, announcing layoffs last year that brought its staff to about half its peak and this year saying it would sell its seven-story San Francisco headquarters. It has also worked to cut marketing costs.

“We have more work to do in our turnaround,” said Chief Executive Frank Gibeau, though he expressed optimism over steps the company has taken to “do more with less.”

The second-quarter improvement was driven by lower expenses, primarily because of a benefit stemming from a change in the estimated fair value of recent acquisition’s liability. Zynga bought the social casino Rising Tide Games last year. Mr. Gibeau said lower marketing costs also helped. Such expenses declined 1.2%.

During the quarter, Zynga’s user base continued to shrink. The company reported 61 million average monthly users—down 26% from a year earlier and 11% from the first quarter. Most of those users play Zynga’s games on mobile devices. Average monthly mobile users dropped 23% year-over-year and 11% from the first quarter. Users who play daily fell 15% from last year’s quarter to 18 million.

As the company’s user base declined, so did revenue. Total sales slid 9.1% to 181.7 million, with online game revenue down 16%. Advertising jumped 22% from a year earlier, though from the first quarter it fell 8%.

Zynga’s loss narrowed to $4.45 million, or a penny a share, compared with a year-earlier loss of $26.9 million, or 3 cents a share. Excluding stock-based expense and acquisition-related costs, among other items, the company broke even on a per-share basis after posting a loss of 2 cents a share last year.

Analysts projected a loss of 2 cents a share and revenue of $169.8 million, according to Thomson Reuters.

For the current quarter, Zynga said it expects to report a loss of 3 cents to 4 cents a share. On an adjusted basis, the company sees a profit of a penny per share, matching analysts’ expectation. Zynga predicted third-quarter sales of $170 million to $180 million, short of the $187.2 million average analyst estimate.